Full Transcript: KE Holdings Q2 2026 Earnings Call

KE Holdings (NYSE: BEKE) reported a mixed but highly profitable second quarter. Total gross transaction value (GTV) increased 6.3% year over year, while revenue declined 5.7%, reflecting adjustments in home renovation and furnishing and changes to home rental revenue recognition. Non-GAAP net income rose 74.9% to 3.185 billion RMB, with a 13% net margin, the highest in three years. Gross margin expanded 6.7 percentage points to 28.6%, while GAAP operating expenses fell 14.1%. GAAP operating profit reached 3.026 billion RMB, up 185.6%, and GAAP net income increased 100.8% to 2.624 billion RMB. Existing-home GTV rose 8% to 629.89 billion RMB, with contribution margin improving to 46.1%. New-home GTV increased 1.2% to 258.39 billion RMB, while contribution margin reached 28.8%. Renovation and furnishing revenue fell 30.1% to 3.19 billion RMB following exits from inefficient markets, although contribution margin rose to 39.6%. Home-rental revenue declined 14.8% to 4.83 billion RMB as Carefree Rent moved to a lighter, lower-risk model with net-basis recognition. Managed rental units exceeded 790,000, up approximately 34%, and contribution margin improved to 15.3%. Emerging and other businesses generated 550 million RMB, up 26.4%. Risks include weaker new-home conditions, which dampened renovation demand, and a full bad-debt provision of approximately 280 million RMB tied to SUNAC-related receivables and collateral. Quarterly operating expenses rose 21.3% because of seasonal selling costs and the provision. Chairman and CEO Stanley Peng highlighted consumer-centric, district-specific operations and AI-enabled decision support. From April to July, leasing-agent efficiency increased from three to 5.6 transactions, while the zero-transaction ratio fell from nearly 25% to below 10%. Broad cash stood at approximately 67.3 billion RMB. The company repurchased about US$2.99 billion of shares since September 2022, reinforcing liquidity and shareholder returns.